Could be an issue with your SD card, don't suppose you have a spare one that you can pop in and try?

If that works, then you can copy over the folders that you want to keep, eg images/musci/video etc on the original SD card to your PC and then use the phone to reformat the SD card, Settings>SD & phone storage, then unmount the card at which point the Format SD Card option is highlighted rather than being grayed out.